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Southwest Ends an Era While American Begins a New One

It was a sentimental day over in Dallas yesterday when Herb Kelleher officially stepped down as Chairman of the Board of Southwest Airlines. It won’t, however, be the end of his involvement with the airline. He’s still going to be around for at least 5 years. Apparently he’ll be focusing on getting a more fuel efficient replacement for the airline’s 737s. Rumor has it that the new plane will be powered by Wild Turkey.

With the end of Herb’s tenure in Southwest management comes the end of an era of true airline people. I know, it’s funny to say that since Herb is a lawyer by trade, but he knew how to run an airline. And drink. And smoke. A lot. He’s not the corporate-type, and he’s not afraid to be very blunt. There’s really nobody made of that kind of metal anymore. Crandall is gone, so is Bethune, and so are countless others who built this industry on their own backs. It really is the end of a era.

So it was fitting that at the same time this happened, American stepped into a new era for the airline industry. The plentiful and cheap seats that we’ve known for a long time are history . . . at least until (if?) fuel costs begin to subside. American was just the first one to take the plunge.

American not only announced that it would slash domestic capacity in the fourth quarter by 11 to 12%, but it also said it would retire at least 75 aircraft and it would start charging $15 to check your FIRST bag. The second bag will still be $25. Why are they doing this? We’ve talked about it a million times. High fuel costs + weakening demand = doom and gloom in the airline industry. But more important than “why” is “what” does it mean to you as a traveler?

08_05_22 bringoutyourdead

The capacity cut will help keep fares up after the heavy summer travel season has passed. So get ready to continue to pay more. Start readjusting your sense of what a fair fare would be, because it’s going to need to be higher.

No details have been released as to which flights will be going away, and American never responded to my query, but we do know that 40 to 45 of the planes will be mainline, another 35 to 40 will be RJs, and there will be an undisclosed number of turboprops going away as well.

Of those mainline planes, most will be, as expected, the gas-thirsty MD-80s that are either now bound to fly for Allegiant or be earthbound for Miller Brewing Co. Those flight cuts could come from anywhere in the US, but I have to think that St Louis is going to see further shrinkage. Meanwhile, they’re also retiring some of the A300s. These are exclusively flown to the Caribbean, so you’ll see smaller planes, if not fewer flights, down there. There will also be RJs and turboprops going away. I’m not sure where the cuts will be, but it wouldn’t surprise me to see the California turboprop flying disappear as well as some of the west coast regional flying. This is, of course, all speculation.

And then there are the baggage fees. Oh boy, what a can of worms this opens. It’s funny that AA was the lone holdout on the fee for checking a second bag for a long time, but now they’re the first to jump right in and charge for the very first bag. This is going to be an ugly transition period.

Now, people will do anything they can to avoid checking a bag. But wait, you still can’t bring liquids over 3 oz through security, so what can you do? Well, you can try to sneak liquids in, and I’m sure many people will. You can just suck it up and pay the fee for checking bags as well, and some will have to do that. I think it’s a safe bet that most people will try to cram as much as they can into a carry-on, and that leads to filled overhead bins and possibly some pretty ugly fights at the gate. What if the overheads are full? Will they charge you to gate-check your bag? There are so many painful operational scenarios here that would keep any customer service agent up at night.

But ultimately, it was American’s realization that as fuel costs continue their upward trajectory, they really don’t have a choice. This is truly the least imaginative way to raise money, but it’s the EASIEST way. Raising fares isn’t even as easy as this. And right now, they’re going for quick and easy. So, once again, brace yourselves when you have to travel. This is going to contribute to an even more difficult experience at the airport. Practice meditating and lay off the coffee when you’re heading out on a flight. The industry is going to be fundamentally changing, and it’s not going to be pleasant while it happens. Hopefully, when things settle down, airlines (existing or new) will find a better way to do business, but for now . . . yikes.

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